Attorney-General George Brandis, said on Monday that 180 service providers will receive $128.4 million through the program and most providers will receive a grant of 80 per cent of their implementation costs.

Under the data retention regime, some telecommunications service providers are required to retain specific telecommunications data relating to the services they offer for two years. Retained data must be encrypted and protected from unauthorised interference or access.

"Service providers will receive 50 per cent of their grant immediately upon signing a funding agreement. This will help businesses on their path to compliance. The remaining 50 per cent will be paid upon the completion of reporting requirements," Senator Brandis said.

Communications data is used in nearly every counter-terrorism, counter-espionages and major crime investigation, Brandis said.

"It is also essential for the investigation of child abuse and child pornography offences, which are frequently carried out online. We will continue to do everything that we can to ensure that our agencies have the resources and powers they need to keep our community safe."

In January this year, Internet Australia criticised the government over its data retention grants program, saying that the $128.4 million allocated to the initiative falls "well short" of the total costs incurred by ISPs.

In the 2015-16 federal budget the government set aside a total of $131.3 million over three years for implementing data retention; which included the cost of administering the grants program, providing technical guidance to the telco sector, and the development of data retention standards.